BC NDP to introduce prompt-payment legislation for construction
For Sarah Walker of electrical contractor Bryant Electric, late payments are a regular part of doing business.
Walker, the company’s chief financial officer, said that while most of the Prince George-based electrical company’s contracts have a 60-day payment term, she is frequently having to track payments down. She estimates that about 40 per cent of all payments to the electrical contractor come in 30 to 60 days late.
“It sucks having to be on top of [project owners] all the time, just constantly having to put calls in,” she said. “It seems like it’s like the norm for construction, and we’re just supposed to accept that.”
The late payments sometimes cause cash flow issues, Walker said. To pay its suppliers on time, the company takes out loans and uses a line of credit, adding costly interest charges to its expenses.
Bryant Electric is not alone. A recent survey by the BC Construction Association, or BCCA, found the majority of construction businesses in B.C. have experienced late or missed payments, leading to high costs and instability for owners and employees at small construction businesses.
B.C. Attorney General Niki Sharma told The Tyee that after hearing concerns from the industry, her ministry is looking into legislation that would mandate timely payment for construction workers.
Industry leaders say the laws will speed up construction and bring stability to small companies.
“If it’s going to be the new norm to get paid sooner, that would be a huge help,” Walker said.
According to the BCCA, the province is home to more than 28,000 construction companies.
Thousands are struggling with late payments. The BCCA’s annual industry survey, released earlier this month, found 91 per cent of construction employer respondents said they had experienced late payments, and 69 per cent reported experiencing not being paid at all.
“That’s a very fragile system,” BCCA president Chris Atchison said. “Employers shouldn’t be put in that position.”
The survey polled 1,342 respondents in the construction industry. About 65 per cent of respondents said they were employers and 26 per cent said they were labourers.
The poll found that businesses with fewer than 100 employees were most likely to be concerned about late or missed payments.
Data from the provincial government shows 76 per cent of the province’s construction businesses are small — which it defines as employing fewer than 50 people.
While BCCA members make it a priority to pay staff, Atchison said, late payments cause these businesses and their workers “tremendous uncertainty.”
“If an employer is constantly late in getting its payment, they’re going into debt at an alarming and unfair rate,” Atchison said. “When they ultimately do fail, it is their employees who will need to move on to other jobs.”
When project owners miss payments completely, Atchison said, contractors need to head to court to get paid, incurring legal fees.
Prompt-payment legislation shifts in B.C. could help ease that burden.
Similar laws have already been implemented for the construction industry in Ontario, Alberta and Saskatchewan. They set deadlines by which owners must pay contractors for their work and offer a way to resolve payment disputes.
In Ontario, for example, an owner must pay a contractor within 28 days of receiving an invoice, and contractors must pay subcontractors within seven days of receiving payment. The province also created an authority responsible for adjudicating payment disputes.
This has helped speed up payments to contractors, Sharma said.
Sharma added the dispute resolution process means contractors missing money aren’t forced to hire lawyers and pay legal fees while tracking down payments. She said she hopes prompt-payment legislation will ensure workers are paid reliably and consistently.
“It is the labourer that’s the most impacted if their people are not paid on time,” Sharma said.
She added that many labourers choose to move on to the next job instead of chasing down payment.
“That is a real injustice,” she said.
Sharma said she hopes the policy is finished within the next two sessions of parliament.
Back at Bryant Electric, vice-president Jason Weaver said he’s optimistic about the NDP’s plans.
“Hopefully if it’s written in law that owners have to pay us sooner, managing cash flow and our business finances will be easier,” he said.
Weaver said any laws that speed up payment would be a “positive move” for the industry.
“We shouldn’t be having to fight for the money on the job that we’ve already done,” Weaver said. “We hold up our end of the deal, so we hope owners hold up their end.”
— This story was originally published by The Tyee
